Zimbabwe's government has set up a state company to seize control of private local and foreign firms that President Robert Mugabe's administration says are engaging in “economic sabotage” in a bid to end his rule.

Mugabe threatened last month to seize private companies for “dirty tricks”, including hiking prices and cutting output, which he says are part of a Western-backed “regime-change” agenda led by Zimbabwe's former colonial master Britain.

On Saturday, the official Herald newspaper said the government had revived the Zimbabwe State Trading Corporation to work alongside the state Zimbabwe Development Corporation (ZDC) “as vehicles for acquiring companies that it might want to take over for engaging in economic sabotage”.

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The government had also set up a Z$30 billion fund to help private distressed companies battling to remain viable under Zimbabwe's economic crisis, the Herald quoted Industry and Trade Minister Obert Mpofu as saying.

But Mpofu said while the government was willing to assist, it would not hesitate to seize firms owned by industrialists suspected of deliberate sabotage and refusing to cooperate with authorities.

“I will hate to reach a stage where I will be forced to take over the companies from you, but if you do not co-operate, that is what is going to happen and that is the position of the government,” it quoted him as telling a business meeting.